What if buying a piece of real estate isn’t a complicated and time-consuming process? Dealing in real estate involves dealing with a broker, swimming in paperwork, and paying high fees and commissions.
Despite recent advances in technology, many jurisdictions still require real estate buyers and sellers to be physically present to execute their documents. This is usually because notaries are required to witness people sign documents in person, and while some notaries can perform this task perfectly, not all have the same skills.
Now, with the help of cryptocurrency (especially NFTs and smart contracts), the direction of real estate transactions is changing rapidly. We’re talking about taking out the middleman and making ownership easier to acquire and transfer. Sales can be made through sites similar to eBay, but with a new level of added security.
In this article, we will focus specifically on the impact of crypto Luxury real estate market. But first, let’s start with the basics: how NFTs and smart contracts work.
What is an NFT?
NFTs, short for non-fungible tokens, are cryptographic tokens that can come in the form of many things (eg music, pictures, videos). Each NFT is 100% unique and cannot be duplicated or replaced. Often, NFTs represent the digital ownership of something, such as digital art. In other cases, they may be representative of material assets such as real estate assets and memberships.
NFTs use blockchain technology to protect their authentication and ownership. In theory, the actual digital file on which the NFT resides can, in fact, be copied, but that doesn’t mean someone takes ownership. The culprit needs access to the smart contract associated with the NFT. Moreover, they must be able to change the smart contract recorded on the blockchain, which is almost impossible.
What is a smart contract?
Smart contracts are self-executing pieces of code built to facilitate transactions. Once the pre-defined conditions are met, the transaction will be settled automatically. The contracts are registered in the blockchain and are protected by regulators after registration.
They are binding contracts that do not require the intervention of a central authority or legal system. Because of this, they are more cost-effective. After all, lawyers, realtors and appraisers are never cheap.
How are the two changing luxury real estate?
As mentioned earlier, the two entities above are changing the luxury real estate industry by cutting out the middlemen, but the other way is by renewing the use of membership. If you’ve owned a timeshare or had a country club membership, you probably know that ownership doesn’t transfer easily. Additionally, your package typically includes an annual renewal process and membership fees.
Now, with promising memberships like the Aspen Lakes Membership at RHUE Resorts, the properties can be held in perpetuity without the need for annual renewals. Specified properties can be transferred through family members and friends if desired. Alternatively, memberships can be sold on secondary markets such as OpenSea, an NFT marketplace similar to eBay.
Through the NFT membership model, Aspen Lakes membership buyers can enjoy:
- Little to no application process or fees
- There are no annual recurring fees
- Easy transfer (no middleman required)
- Existing amenities such as a world-class 18-hole golf course, pro-shop, restaurant, wedding and event center.
Most NFTs are limited to being bought in cryptocurrency, which can exclude certain investors. RHUE is combating this by allowing resorts to purchase memberships via cryptocurrency or debit/credit cards. This also allows them to appeal to the traditional market by engaging crypto-enthusiasts.
Another example is the crypto project City DAO. The idea here is that a person can buy a piece of land in Wyoming and sell it to parties who want management rights. Those who wish to become part of the government structure must obtain a citizenship certificate through the NFT. It is important to note that citizens do not own land. Decisions involving policy changes and regulations are made solely on him.
Of course, only so many members can rule in this kind of “government” structure.
The FlyFish Club (FFC) brings an exciting twist to the food industry. Private Dining Club hosts the world’s first NFT restaurant that requires NFT membership for dining access. The rumored restaurant will offer more than 10,000 square feet and will be in an “exciting location” in New York City. Additionally, according to the FlyFish Club website, FFC NFT buyers can enjoy “a variety of culinary, cultural and social experiences.” The project holds great promise, however, it is still in its infancy.
Good gifts and bright ideas
While NFTs and blockchain are opening doors in many industries, it’s still difficult to identify which ventures will “stick.” Projects like City DAO have interesting ideas but have yet to deliver anything concrete. On the other hand, companies like RHUE Resorts are established and growing, offering luxury services immediately in real life.
Blockchain will revolutionize many industries by bringing many efficiencies and benefits over traditional alternatives. Real estate has shown itself to be ripe for improvement and seems like a perfect candidate to enter the world of cryptocurrency and NFTs.